Stocks Close Modestly Higher Amid Light Trading

9/19/2012 4:32 PM ET

Stocks moved modestly higher over the course of the trading day on Wednesday, although buying interest remained subdued. Lingering uncertainty about the near-term outlook for the markets helped to keep traders on the sidelines.

The major averages gave back ground going into the close but managed to end the day posting slim gains. The Dow inched up 13.32 points or 0.1 percent to 13,577.96, the Nasdaq crept up 4.82 points or 0.2 percent to 3,182.62 and the S&P 500 edged up 1.73 points or 0.1 percent at 1,461.05.

The modest strength on Wall Street was partly due to news of additional stimulus from the Bank of Japan, although the bank's decision to increase its asset purchase program by 10 trillion yen was largely seen as symbolic since the purchases are exclusively earmarked for 2013.

In a research note, Capital Economics said, "The Bank of Japan surprised markets today with a move that gave the impression of coordinated easing by the major global central banks, providing a welcome boost to confidence."

"However, we had already expected them to ease by this amount in October, so although the timing is slightly earlier than we (and most others) had anticipated, it is not a game changer," the firm added.

Traders were also presented with a mixed batch of U.S. housing data, including a report from the Commerce Department showing that housing starts rebounded in August but still came in below economist estimates.

The Commerce Department said housing starts rose 2.3 percent to an annual rate of 750,000 in August from the revised July estimate of 733,000. Economists had expected starts to climb to 768,000 from the 746,000 originally reported for the previous month.

Building permits, an indicator of future housing demand, fell 1.0 percent to an annual rate of 803,000 in August from 811,000 in July.

A separate report from the National Association of Realtors showed that existing home sales jumped by more than expected in August, reaching their highest level since May of 2010.

NAR said existing home sales jumped 7.8 percent to an annual rate of 4.82 million in August from 4.47 million in July. Economists had expected existing home sales to climb to an annual rate of 4.55 million.

Chris Low, chief economist at FTN Financial, said, "Bear in mind this report, and this morning's housing starts, pre-date the Fed's QE3 mortgage purchase announcement. The Fed's help for housing comes on top of a recovery already in progress."

"Housing is not booming, but it is improving and will continue to do so in part because the Fed is determined to drive mortgage rates to new historic lows," he added.

Among individual stocks, Cracker Barrel (CBRL), AutoZone (AZO), and General Mills (GIS) all ended the day notably higher after reporting their quarterly results before the start of trading.

In overseas trading, stock markets across the Asia-Pacific region moved to the upside on Wednesday following the news from the Bank of Japan. Japan's Nikkei 225 Index and Hong Kong's Hang Seng Index both ended the day up by 1.2 percent.

The major European markets also moved higher over the course of the trading day. The U.K.'s FTSE 100 Index rose by 0.4 percent, the French CAC 40 Index climbed 0.5 percent, and the German DAX Index advanced by 0.6 percent.

In the bond market, treasuries moved moderately higher, extending the upward move seen over the two previous sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3 basis points to 1.782 percent.

Benefiting from a sharp pullback by the price of crude oil, airline stocks saw considerable strength amid optimism about lower fuel costs. The NYSE Arca Airline Index surged up by 2.9 percent amid strong gains by United Continental (UAL) and US Airways (LCC).

Housing stocks also moved sharply higher, benefiting from a positive reaction to the day's housing data. Reflecting the strength in the housing sector, the Philadelphia Housing Sector Index rose by 2.2 percent. Telecom, trucking, and gold stocks also moved to the upside on the day

Meanwhile, oil service stocks came under pressure, moving lower along with the price of crude oil. With crude for October delivery tumbling $3.31 to $91.98 a barrel, the Philadelphia Oil Service Index ended the day down by 1.1 percent.

Railroad stocks also saw considerable weakness, dragging the Dow Jones Railroads Index down by 1.2 percent. With the loss, the index pulled back further off last Friday's record closing high.

Trading on Thursday could be impacted by the release of additional U.S. economic data, including reports on weekly jobless claims, leading economic indicators and Philadelphia-area manufacturing activity.